The LED market in China has been experiencing low demand, however, due to subsidies provided by local governments, new installations of MOCVD equipment in 2011 will likely reach 420 units. The figure is much lower than expected, however, the total number of MOCVD sets in China is likely to reach 756 unit by the end of 2011.

As the China's 12th Five-Year Plan kicks off, the LED industry anticipates output value in China to grow to CNY500 billion (US$78 billion) by 2015.

According to statistics, the total capacity of LED chips in China reached 83 billion units in 2009. The figure grew to 98 billion units in 2010 as China-based firms aggressively expanded capacity by acquiring new equipment. In 2010, China added 245 units of MOCVD equipment, however, not all were put to operation due to delays in plant construction. In 2011, many firms wanted to obtain government subsidies before the program ends, therefore, China is likely to add 420 more units of MOCVD equipment.

Industry sources indicated that 1,200 MOCVD sets in the world are sufficient to produce products to meet demand. However, the number of MOCVD sets around the world has grown to 1,500 units in 2011 pushing the market into oversupply. The growth of MOCVD equipment in 2012 should stagnate, added industry sources.

Capacity for upstream LED epitaxial wafers has been growing rapidly. According to estimates, in 2015, China's sapphire substrate capacity will exceed 90 million units and push the price to a new low due to lack of demand in the LED market.

Despite the oversupply problems, the determination to develop LED lighting can be seen in China's 12th Five-Year Plan. 19 out of 30 provinces and cities have announced plans to promote the growth of the LED lighting industry.